If New Jersey Transit Strike Is On, Commercial Activity in NJ and NY Will Be Way Off

Estimates indicate that a strike could cost NY businesses $6 million per hour, impact NJ economy as badly as superstorm Sandy

Credit: Luke Waltzer

Homebound New Jersey commuters waiting for NJ Transit trains in New York City's Penn Station, on a typical rush-hour evening.

Experts warn that a lengthy strike by New Jersey Transit rail workers, which could begin as early as Sunday morning, will undoubtedly disrupt commercial activity, with some comparing the potential impact to the aftermath of 2012’s superstorm Sandy. A lengthy strike could also inflict long-term damage on NJ Transit itself, including some residual loss of customers.

The agency’s own strike-contingency plan, announced by officials last week, accommodates less than half of the more than 100,000 commuters who currently take trains into New York City each weekday.

Martin Robins, director emeritus of Rutgers University’s Alan M. Voorhees Transportation Center, is a veteran of New Jersey Transit’s last strike, a 1983 work stoppage that lasted several weeks.

“There was a lot of hardship, and the number of people affected was much smaller,” said Robins, the agency’s former deputy director.

Right now, however, NJ Transit officials and the union representatives for roughly 4,200 rail workers who have been working without a contract since 2011 say they remain committed to trying to reach an agreement before the looming strike date. Pay raises and employee healthcare contributions have been the key sticking points.

During a break in talks yesterday afternoon, Gary Dellaverson, NJ Transit’s special counsel, told reporters gathered at the Gateway Hilton in Newark that even as the negotiations were ongoing and as progress was being made he didn’t have “anything exciting to say.”

“There are a fair number of moving pieces still,” Dellaverson said.

But union officials also took issue later with a notice issued by NJ Transit to employees that a strike would mean things like sick leave and insurance benefits would be suspended for those who walk off the job.

“Such action on NJ Transit’s part is counterproductive to reaching an amiable solution through the negotiating process,” a statement issued by the New Jersey Transit Rail Labor Coalition said.

Last week, agency officials announced a strike-contingency plan that includes the use of private buses and a stepped-up NJ Transit bus schedule to help get displaced rail passengers into New York. The plan also features the use of several park-and-ride facilities to move strike-bound rail passengers into Manhattan, either directly or via Port Authority PATH trains.

Run the numbers and -- despite a sizable subsidy in the budget plan -- NJT could be facing a $60M deficit

But agency officials also conceded the contingency plan will only meet the needs of about 40 percent of the overall pool of people who normally take NJ Transit trains into New York on a daily basis.

In New York, the economic impact of a New Jersey Transit strike on the city’s employers is estimated to be nearly $6 million for every hour of delay, according to an analysis prepared by the Partnership for New York City. The financial services industry would see the biggest blow, at nearly $2 million per hour.

New Jersey Senate Budget and Appropriations Committee Chairman Paul Sarlo (D-Bergen) said he fears the strike will affect the economy in New Jersey as well. He compared the potential effects of a strike to the days and weeks after superstorm Sandy, when most rail service was suspended for several days.

“Just like Sandy, the impact could even hurt state revenues and the state budget,” Sarlo said.

He urged Gov. Chris Christie’s administration to do all it can to prevent a self-inflicted service disruption this time around.

“It wouldn’t be a disaster caused by nature, but it would have disastrous effects on the lives of commuters as well as the regional and state economy,” Sarlo said.

And it’s unclear right now exactly how a strike would impact New Jersey Transit’s own already shaky finances. The agency just raised fares for bus and rail services by 9 percent in October to help close what was at the time an $80 million budget shortfall. That followed a larger, 25 percent fare increase enacted in 2010, Christie’s first year in office.

At this point, NJ Transit isn’t saying how much its strike-contingency plan may end up costing the agency to implement.

“NJ Transit remains fully focused on reaching an affordable settlement with the rail unions for our customers,” spokeswoman Nancy Snyder said. “We will not speculate on cost estimates for a contingency plan which has not yet been implemented.”

But Robins, the former agency executive, said NJ Transit could actually end up with a net savings if there is a strike.

While it will take on costs like renting private buses and paying the wages of the additional bus drivers during the strike, the break would also allow the agency to save money by not paying the wages of the rail workers for as long as they strike. Train fuel and electrical costs would also likely be saved.

“It will be a net benefit financially to New Jersey Transit to have a strike,” Robins said. “I would be surprised if the costs exceed the savings.”

But he also warned that the agency will eventually see a big bill for the rail workers’ retroactive pay since they’ve been working without a contract since 2011. That’s a “front-and-center issue,” Robins said.

And NJ Transit could also be hit with a loss in ridership if a strike occurs. That’s because riders may decide that the alternatives they found while the strike was in progress are more convenient or cheaper in the long run once it is settled.